(Bloomberg) — Intel Corp. agreed to sell a share in a factory in Ireland to Apollo Global Management Inc. to sell for $11 billion, securing more external financing for a massive expansion of its factory network.
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Under the terms of the deal, the investment firm will take a 49% stake in a joint venture that owns Intel’s Fab 34, the chipmaker said in a statement on Tuesday. It’s the second such investment program Intel has announced, part of an effort to ease pressure on its already tight finances.
Chief Executive Officer Pat Gelsinger is pushing for an ambitious and expensive plan to return Intel to the top of the semiconductor industry. He is investing heavily to revive its struggling product range, pouring money into factories around the world, with the aim of revitalizing production and attracting external third-party manufacturing customers.
Intel, once the richest company in the semiconductor industry, has been forced to seek external financing in a program called “Smart Capital.”
“The announcement highlights Intel’s continued progress in its transformation strategy,” the company said in the statement. “The company continues to make progress to create financial flexibility and accelerate its strategy, including investments in global manufacturing operations, while maintaining a strong balance sheet.”
Intel said construction of the factory, on an existing site in Leixlip near Dublin, is “substantially complete”. The transaction, which will allow Intel to invest its money elsewhere, will close in the second quarter of 2024. Fab 34 will use Intel’s 4- and 3-process technologies.
In 2022, Intel announced a deal with Brookfield Infrastructure Partners LP to secure a $15 billion commitment to finance a semiconductor complex in Arizona.
That deal helped allay fears that Gelsinger’s revival plan would prove too expensive. A string of weak earnings results – along with losing market share to rivals like Nvidia Corp. – have revived these concerns and weighed on Intel stock.
The shares, which fell less than 1% to $30.03 in New York trading on Tuesday, are the worst-performing member of the Philadelphia Stock Market Semiconductor Index. They are down 40%.
(Updates with company commentary, details of previous deals begin in third paragraph.)
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